China has been stockpiling crude in strategic and commercial reserves for nearly a year – boosting oil prices through 2025 even as demand growth weakens.
As we approach oil markets in 2026 with two major geopolitical events that have shaken oil markets within months, the US impeachment of Venezuela’s Nicolás Maduro and the US-Israeli attacks on Iran – China’s oil reserves will likely be more volatile in the early days of the anticipated and already turbulent Middle East war.
China’s strategy of building up reserves for nearly a year while buying at relatively low prices is now paying off, as the world’s top crude importer has some buffer to power in the early days of severely disrupted oil flows from the Middle East, analysts say.
China’s energy security strategy and plan to regularly buy cheap crude oil, including barrels of sanctions, have shielded the world’s second-largest economy, to some extent, from temporary supply disruptions as the war in Iran and Tehran’s retaliatory attacks on its Gulf neighbors escalate.
China could soon replenish Iranian and Russian crude oil that has been sitting in floating storage for weeks.
China’s raw material inventory
Beijing is believed to have been stockpiling crude in commercial and strategic reserves for nearly a year — taking advantage of low international prices and even lower prices for curbed supplies from Iran, Venezuela and Russia.
Venezuela is now back on the legal market with sales under US control, but China has begun buying record amounts of Russian oil as India pulls back.
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No one knows exactly the amount of Chinese supplies, but with low prices and expanding storage capacity, Beijing – which does not disclose stockpiles – is estimated to have sent at least 1 million barrels a day of crude into storage last year.
Unlike the United States, China does not report inventories. Analysts look at total supplies (domestic production and imports) and oil refining rates to estimate how much crude oil goes into strategic or commercial reserves and how much is processed into oil.
Last year, despite the easing of OPEC+ cuts, huge supply growth from the US, and the continued flow of sanctions from Iran, Russia and Venezuela, oil prices fell.
For most of 2025, global crude oil benchmarks have remained steady at around $60 per barrel, which China apparently sees as cheap enough to buy more crude than it needs immediately and put it in commercial or strategic stockpiles.
Last year, China increased its oil imports on an annual basis. The record imports came despite weak demand for transportation fuels, the ever-changing U.S. tariff policy on parts of the Chinese economy, and struggling global markets, including commodity markets.
Storage pays off
This year, in light of recent rains in the Middle East, which are now burning and severely affecting energy supplies, China’s move to build reserves at a time of low oil prices is paying off.
“China very wisely stockpiled a lot of crude oil last year so they have a buffer to ride out the current crisis,” George Levin, head of geopolitical analysis at Rystad Energy, told Bloomberg Television earlier this week.
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China, whose independent refiners have never escaped an oil embargo, has the option of buying Russian and Iranian crude oil that has accumulated in past reserves, most of which sit far from the Strait of Hormuz and not far from China’s ports in Asia.
As of February 27, 2026, the day before the U.S.-Israeli attack on Iran, according to Keller’s estimate, Iran’s crude oil total worldwide was 191 million barrels.
Of that total, about 25 million barrels remain in the Middle East Gulf, mainly consisting of cargoes that have recently been loaded. But most of the remaining 166 million barrels, about 127 million barrels, are currently in the east, including the Straits of Malacca, the Straits of Singapore, the South China Sea, the East China Sea and the Yellow Sea, while about 39 million barrels are located in the Arabian Sea and the Gulf of Oman, possibly on the way to the east as well.
Moreover, China — and India, for that matter — have strong incentives to boost Russian crude supplies, Kpler’s Amina Bakr said in a Sunday note.
“China also has significant strategic oil reserves in the global supply chain. This provides a buffer in the short term but positions Beijing as a potential re-exporter to third markets if the supply crisis deepens,” Booker noted.
With oil prices rising to $80 per barrel, and the Strait of Hormuz expected to rise above $100 a barrel if the Strait of Hormuz comes off the curb for more tankers in two to three weeks, China will be more motivated to shed the additional sanctions barrels. Not only is it cheap, but it is also stocked in floating stocks in waters off the Middle East and off the coast of China.
By Tsvetana Paraskova for Oilprice.com
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